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Sam Inc. is a 90% owned subsidiary of Paul Corp. Paul sold land to Sam for $100,000 that originally cost Paul $50,000. Paul uses the fully adjusted equity method. What adjustment is needed on Paul's books in the year the land is sold to Sam?

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tanseershar

Answer:

 The answer is given below;      

Explanation:

The entry at the time of sale was;

Bank   Dr.$100,000

Land   Cr.$50,000

Gain on Land Cr.$50,000

At the time of consolidation, elimination the entry will be;

Retained Earnings/gain on land   Dr.$50,000

Land                                              Cr.$50,000

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